RIYADH: A long-term SR720 million financing agreement was signed here on Tuesday by Jubail Energy Services Company (JESCO), a subsidiary of the Industrialization and Energy Services Company (TAQA), and the Public Investment Fund (PIF), a state-owned organization established by a royal decree to provide finance to commercial ventures.
The funds will be used to finance part of the seamless pipe manufacturing facility being built in the Saudi industrial city of Jubail. Speaking on the occasion of inking the agreement, Mansour Al-Miman, PIF general secretary, said, “this financing is in line with the directives of the government led by Custodian of the Two Holy Mosques King Abdullah to encourage and support local manufacturing and to find means to expand and develop it.” Al-Miman said that this financing is also a continuation of the PIF’s policy aimed at encouraging and supporting strategic manufacturing in the Kingdom, while financing investments in productive projects.
The manufacturing facility for seamless pipes will create some 500 direct jobs while maximizing the Saudization rate and localizing production know-how, said TAQA Chairman Abdulaziz Bin Saleh Al-Jarbou. This facility will be unique in the Middle East and is designed to produce 400,000 metric tons per year of seamless pipes used in oil and gas production as well as in transportation sector. It will be the first operating seamless pipe mill in the very demanding market in Middle East.
According to the plan, the production start-up is planned for first quarter 2009 with a production capacity of 500,000 metric tons of seamless pipes, covering OCTG products and line pipes for oil and gas industry, said Al-Jarbou. JESCO’s product range will incorporate standard products as well as high steel grades and premium connections in order to comply with current and future oil and gas companies’ demands. He also expressed his gratitude and appreciation for the PIF’s strategic role in encouraging and supporting local manufacturing.
Speaking on the occasion, Hamad Bin Mohammed Al-Kanhal, JESCO’s board member, who signed the agreement on behalf of JESCO’s President Khalil Al-Gannas, said that the company owns and develops all technical, financial and human capabilities required to secure a leadership position in this specialized global manufacturing sector. It is worth noting that the TAQA owns 51 percent of JESCO, while the balance of the company’s share capital is owned by Saudi and foreign investors.
Since its inception, TAQA has taken the challenge of developing a world-scale seamless pipe plant which would utilize the latest technological advances in the field. In 2006, TAQA launched the subsidiary called Jubail Energy Services Company (JESCO), which will manufacture the seamless pipes in Jubail 1 Industrial Area. Site work has started on a primary industrial site with an area of 730,000 square meters, which was allocated to TAQA by the Royal Commission of Jubail and Yanbu.
